We have been tracking advances within biopharma and medtech deals and financing through Q3 2023 to see what might be shaping up for 2024. R&D deals took center stage, with Pfizer’s collaboration with Flagship Pioneering, promising an exclusive global option for 10 undisclosed therapies, and the Nurix and Seagen’s partnership, potentially reaching $3.4 billion in milestones and royalties. A number of prominent deals followed in mid-October with the Daiichi / Merck deal for 3 ADCs in a license partnership with $4 billion up front and potentially $22 billion in total deal dollars. Q3 M&A activity saw Eli Lilly’s strategic acquisition of Versanis Bio, offering substantial potential payouts, and Novartis’ acquisition of DTx Pharma. On the ventures front, Nephron Pharmaceuticals’ $350 million capital raise and Neuralink’s $280 million Series D funding round, led by Founders Fund, demonstrated support for innovative healthcare solutions. Furthermore, RayzeBio’s $358 million upsized IPO and Neumora Therapeutics’ IPO pushed the sector to reactivate the IPO desk.
Biopharma and Medtech R&D Partnerships
There were 141 R&D partnerships for biopharma and medtech programs in Q3 2023 totaling $38.8 billion. Upfront cash and equity payments totaled $1.3 billion. While the number of deals decreased slightly compared to Q2 2023, which had 161 deals, the increase in the total value of these agreements indicates an emphasis on milestones and risk-off partnerships. For 2023 year-to-date, there were 512 deals amounting to $107.7 billion in total announced deal value.
Biopharma and Medtech M&A
There were 55 biopharma and medtech M&A deals in Q3 2023 totaling $25.8 billion. These acquisitions saw $20.3 billion in upfront cash and equity and $5.5 billion in contingent considerations, again leaning on performance-based terms. It’s worth noting that the number of deals and the total deal value in Q3 decreased compared to Q2 2023, which saw 60 deals and substantial total value. Nevertheless, M&A activity in the sector signifies ongoing valuable and strategic acquisitions. For 2023 year-to-date there have been 177 M&A deals with a cumulative announced deal value of $140.9 billion.
Biopharma and Medtech Venture Activity
2023 has seen a quarter-over-quarter increase in venture funding in all subsectors showing a return to investments. In Q3 2023, global healthcare and life sciences secured an impressive $10.9 billion across 269 funding rounds, maintaining its growth from Q2 2023, when $10.5 billion was raised from 292 rounds. We are seeing larger round sizes as existing investors re-invest in portfolio companies. This trend began in Q1 of 2023, with the sector attracting $8.1 billion in funding from 262 rounds. This was a notable contrast to Q4 of 2022, where the sector raised $7.9 billion through 260 rounds.
Biopharma and Medtech IPO
IPO activity returned in Q3 2023 with 13 IPOs generated $1.2 billion. The substantial IPO in Q2 2023 was Kenvue, the J&J spin-off IPO at over $5 billion. Previously, Q1 2023 recorded $452 million raised through just 7 IPOs.
The Top Financing Deals in Q3 2023
R&D Partnerships
Pfizer’s Partnership with Flagship Pioneering (July 2023)
Pfizer partnered with Flagship Pioneering, gaining an exclusive global option for 10 undisclosed therapies. The initial joint investment was $100 million equally. Flagship is eligible for $700 million per therapy in combined milestones and royalties.
Nurix and Seagen Partnership (September 2023)
Nurix granted Seagen rights to develop cancer therapies with Degrader-Antibody Conjugates. Nurix focuses on degraders, and Seagen focuses on clinical and commercialization. Nurix receives $60 million up front with potential for $3.4 billion in milestones and royalties, plus U.S. profit sharing on two products.
M&A Deals
Eli Lilly’s Acquisition of Versanis Bio (July 2023)
Eli Lilly acquired Versanis Bio, focusing on bimagrumab for metabolic diseases. Versanis Bio could receive up to $1.9 billion, with undisclosed upfront distribution.
Novartis’ Acquisition of DTx Pharma (July 2023)
Novartis is acquiring DTx Pharma, with its CMT1A treatment and research-stage therapies. DTx Pharma’s shareholders will receive $500 million up front and potentially $500 million in milestones.
Venture Funding Deals
Nephron Pharmaceuticals’ $350 Million Capital Raise (September 2023)
Nephron Pharmaceuticals concluded a $350 million capital raise led by BlackRock Capital Investment. The funding supports Nephron’s pharmaceutical manufacturing growth supplying inhalation solutions, suspension products, and sterile supplies to combat hospital drug shortages.
Neuralink’s Series D Funding Round (August 2023)
Elon Musk’s Neuralink raised $280 million in a Series D funding round led by Peter Thiel’s Founders Fund. This follows FDA approval for human trials of Neuralink’s brain-computer interface, with Founders Fund also being a significant investor in the previous $205 million Series C round in 2021.
IPO Activity
RayzeBio’s Successful $358 Million Upsized IPO (September 2023)
RayzeBio, a radiopharmaceutical company targeting solid tumors including a Phase III program, concluded an upsized IPO, raising $358 million. They sold 19,869,240 common stock shares at $18.00 each. RayzeBio received $336.7 million in gross proceeds. Trading of RYZB shares began on the Nasdaq Global Market on September 15, 2023
Neumora Therapeutics’ IPO Pricing (September 2023)
Neumora Therapeutics, a neuroscience drug company, priced its IPO at $17.00 per share, offering 14,710,000 shares for an expected $250 million in gross proceeds. Underwriters have the option to buy 2,206,500 more shares. NMRA shares will trade on the Nasdaq Global Select Market starting September 15, 2023. Neumora addresses brain diseases with a pipeline of seven clinical and preclinical neuroscience programs.
